AMENDED AND RESTATED
PARTICIPATION AGREEMENT
By and Among
THIRD AVENUE VARIABLE SERIES TRUST
And
THIRD AVENUE MANAGEMENT LLC
And
IDS LIFE INSURANCE COMPANY OF NEW YORK
THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT ("Agreement"), made
and entered into as of this 12th day of October, 2006 by and among the
following parties:
o IDS LIFE INSURANCE COMPANY OF NEW YORK (the "Company"), a New York
life insurance company, on its own behalf and on behalf of the
separate accounts set forth on Schedule 1 hereto as may be amended
from time to time by mutual consent (each such account referred to
as an "Account");
o THIRD AVENUE VARIABLE SERIES TRUST, an open-end management
investment company organized under the laws of Delaware (the
"Fund"); and,
o THIRD AVENUE MANAGEMENT LLC, a limited liability company organized
under the laws of Delaware (the "Adviser").
WHEREAS, the Fund was established for the purpose of serving as the investment
vehicle for insurance company separate accounts supporting variable annuity
contracts and variable life insurance policies to be offered by insurance
companies that have entered into participation agreements with the Fund and
the Adviser (the "Participating Insurance Companies"), and
WHEREAS, beneficial interests in the Fund currently consist of one series of
shares representing the interest in a particular managed portfolio of
securities and other assets; and
WHEREAS, the Fund has received an order from the Securities & Exchange
Commission (the "SEC") granting Participating Insurance Companies and their
separate accounts relief from the provisions of Sections 9(a), 13(a), 15(a),
and 15(b) of the 1940 Act and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder,
to the extent necessary to permit shares of the Fund to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated Participating Insurance Companies and certain
qualified pension and retirement plans outside of the separate account context
(the "Exemptive Order"); and
WHEREAS, the Company has registered or will register certain variable annuity
contracts and/or variable life insurance policies (the "Contracts") under the
1933 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the portfolios named in Schedule 2
to this Agreement, as may be
amended from time to time, (the "Portfolios") on behalf of the Account to fund
the Contracts; and
WHEREAS, under the terms and conditions set forth in this Agreement, the
Adviser desires to make shares of the Fund available as investment options
under the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the parties agree
as follows:
ARTICLE A. AMENDMENT AND RESTATEMENT
-------------------------
A.1. The Fund and the Adviser acknowledge the planned re-naming of the
Company to RiverSource Life Insurance Co. of New York on December 31,
2006 at 10:59:59 p.m. Central Time (the "Effective Time"). On and
after the Effective Time, all references in this Agreement and its
Schedules to the Company and to IDS Life Insurance Company of New
York shall mean and refer to RiverSource Life Insurance Co. of New
York.
A.2. This Agreement shall amend and supersede the Participation Agreement
dated June 5, 2002 by and among the Company, the Fund and the Adviser
as of the date first stated above.
ARTICLE I. SALE AND REDEMPTION OF FUND SHARES
----------------------------------
1.1. The Fund will sell to the Company those shares of the Portfolios that
each Account orders, executing such orders on a daily basis at the net
asset value next computed after receipt and acceptance by the Fund (or
its agent). Shares of a particular Portfolio of the Fund will be ordered
in such quantities and at such times as determined by the Company to be
necessary to meet the requirements of the Contracts. The Board of
Trustees of the Fund (the "Fund Board") may refuse to sell shares of any
Portfolio to any person, or suspend or terminate the offering of shares
of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the
Fund Board, acting in good faith and in light of its fiduciary duties
under federal and any applicable state laws, necessary in the best
interests of the shareholders of such Portfolio.
1.2. The Fund will redeem any full or fractional shares of any Portfolio when
requested by the Company on behalf of an Account at the net asset value
next computed after receipt by the Fund (or its agent) of the request
for redemption, as established in accordance with the provisions of the
then current prospectus of the Fund.
1.3. For purposes of Sections 1.1 and 1.2, the Fund hereby appoints the
Company as its agent for the limited purpose of receiving and accepting
purchase and redemption orders resulting from investment in and payments
under the Contracts. Receipt by the Company will constitute receipt by
the Fund provided that: (a) such orders are received by the Company in
good order prior to the time the net asset value of each Portfolio is
priced in accordance with its prospectus; and (b) the Fund receives
notice of such orders by 9:00 a.m. Central Time on the next following
Business Day. "Business Day" will mean
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any day on which the New York Stock Exchange is open for trading and on
which the Fund calculates its net asset value pursuant to the rules of
the SEC.
1.4. The Company will pay for a purchase order on the same Business Day as
the Fund receives notice of the purchase order in accordance with
Section 1.3. The Fund will pay for a redemption order on the same
Business Day as the Fund receives notice of the redemption order in
accordance with Section 1.3 and in the manner established from time to
time by the Fund, except that the Fund reserves the right to suspend
payment consistent with Section 22(e) of the Investment Company Act of
1940, as amended (the "1940 Act") and any rules thereunder. In any
event, absent extraordinary circumstances specified in Section 22(e) of
the 1940 Act, the Fund will make such payment within five (5) calendar
days after the date the redemption order is placed in order to enable
the Company to pay redemption proceeds within the time specified in
Section 22(e) of the 1940 Act or such shorter period of time as may be
required by law. All payments will be made in federal funds transmitted
by wire or other method agreed to by the parties.
1.5. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate subaccount of each
Account.
1.6. The Fund will furnish same day notice (by wire or telephone, followed by
written confirmation) to the Company of the declaration of any income,
dividends or capital gain distributions payable on each Portfolio's
shares. The Company hereby elects to receive all such dividends and
distributions as are payable on the Portfolio shares in the form of
additional shares of that Portfolio. The Company reserves the right to
revoke this election and to receive all such dividends and distributions
in cash. The Fund will notify the Company of the number of shares so
issued as payment of such dividends and distributions.
1.7. The Fund will make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and will use
its best efforts to make such net asset value per share available by
5:30 p.m. Central Time, but in no event later than 6:00 p.m. Central
Time each Business Day. The Fund will notify the Company as soon as
possible if it is determined that the net asset value per share will be
available after 6:00 p.m. Central Time on any Business Day, and the Fund
and the Company will mutually agree upon a final deadline for timely
receipt of the net asset value on such Business Day.
1.8. Any material errors in the calculation of net asset value, dividends or
capital gain information will be reported immediately upon discovery to
the Company. An error will be deemed "material" based on the Fund's
interpretation of the SEC's position and policy with regard to
materiality, as it may be modified from time to time. If the Company is
provided with materially incorrect net asset value information, the
Company will be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct net asset value per share.
Neither the Fund, the Adviser nor any of their affiliates
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will be liable for any information provided to the Company pursuant to
this Agreement which information is based on incorrect information
supplied by or on behalf of the Company to the Fund or the Adviser.
1.9. The Fund agrees that its shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified
pension and retirement plans to the extent permitted by the Exemptive
Order. No shares of any Portfolio will be sold directly to the general
public. The Company agrees that Fund shares purchased by the Company
will be used only for the purposes of funding the Contracts and Accounts
listed in Schedule 1, as amended from time to time.
1.10. The Fund agrees that all Participating Insurance Companies will have the
obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 3.4
and Article IV of this Agreement.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
------------------------------
2.1. The Company represents and warrants that:
(a) it is an insurance company duly organized and in good standing
under applicable law;
(b) it has legally and validly established or will legally and validly
establish each Account as a separate account under applicable
state law;
(c) it has registered or will register to the extent necessary each
Account as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated investment
account for the Contracts;
(d) it has filed or will file to the extent necessary the Contracts'
registration statements under the Securities Act of 1933 (the
"1933 Act") and these registration statements will be declared
effective by the SEC prior to the sale of any Contracts;
(e) the Contracts will be filed and qualified and/or approved for
sale, as applicable, under the insurance laws and regulations of
the states in which the Contracts will be offered prior to the
sale of Contracts in such states; and
(f) it will amend the registration statement under the 1933 Act for
the Contracts and the registration statement under the 1940 Act
for the Account from time to time as required in order to effect
the continuous offering of the Contracts or as may otherwise be
required by applicable law, but in any event it will maintain a
current effective Contracts' and Account's registration statement
for so long as the Contracts are outstanding unless the Company
has supplied the Fund with an SEC no-action letter, opinion of
counsel or other evidence satisfactory to the Fund's counsel to
the effect that maintaining such registration statement on a
current basis is no longer required.
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2.2. The Company represents and warrants that the Contracts are intended to
be treated as annuity or life insurance contracts under applicable
provisions of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"), and that it will make every effort to maintain
such treatment and that it will notify the Fund and the Adviser
immediately upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or that they might not be so
treated in the future.
2.3. The Fund represents and warrants that:
(a) it is duly organized and validly existing under applicable state
law;
(b) it has registered with the SEC as an open-end management
investment company under the 1940 Act;
(c) Fund shares of the Portfolios offered and sold pursuant to this
Agreement will be registered under the 1933 Act and duly
authorized for issuance in accordance with applicable law;
(d) it is and will remain registered under the 1940 Act for as long as
such shares of the Portfolios are sold;
(e) it will amend the registration statement for its shares under the
1933 Act and the 1940 Act from time to time as required in order
to effect the continuous offering of its shares;
(f) it expects to qualify as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code, it will make every
effort to maintain such qualification (under Subchapter M or any
successor or similar provision) and it will notify the Company
immediately upon having a reasonable basis for believing that it
has ceased to so qualify or that it might not so qualify in the
future; and
(g) it will register and qualify the shares of the Portfolios for sale
in accordance with the laws of the various states to the extent
deemed advisable by the Fund. The Fund makes no representation as
to whether any aspect of its operations (including, but not
limited to, fees and expenses and investment policies, objectives
and restrictions) complies with the insurance laws and regulations
of any state. The Fund and the Adviser agree that they will
furnish the information required by state insurance laws and
requested by the Company so that the Company can obtain the
authority needed to issue the Contracts in the various states.
2.4. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it reserves the right to make such payments in the
future. To the extent that the Fund decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have its Fund
Board, a majority of whom are not "interested" persons of the Fund,
formulate and. approve any plan under Rule 12b-1 to finance distribution
expenses.
5
2.5. The Fund and the Adviser represent and warrant that they will invest
money from the Contracts in such a manner as to ensure that the
Contracts will be treated as variable annuity contracts and variable
life insurance policies under the Internal Revenue Code and the
regulations issued thereunder. Without limiting the scope of the
foregoing, the Fund and the Adviser further represent and warrant that
they will comply with Section 817(h) of the Internal Revenue Code and
Treasury Regulation 1.817-5, as amended from time to time, relating to
the diversification requirements for variable annuity, endowment, or
life insurance contracts and any amendments or other modifications to
such Section or Regulation. In the event of a breach of this
representation and warranty by the Fund and/or the Adviser, they will
take all reasonable steps:
(a) to notify the Company of such breach; and
(b) to adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Treasury Regulation 1.817-5.
2.6. The Adviser represents and warrants that:
(a) it is and will remain duly registered under all applicable federal
and state securities laws; and
(b) it will perform its obligations for the Fund in accordance with
applicable state and federal securities laws and that it will
notify the Company promptly if for any reason it is unable to
perform its obligations under this Agreement.
2.7. Each party represents and warrants that, as applicable, all of its
directors, officers, employees, investment advisers, and other
individual entities having access to the funds and/or securities of the
Fund are and will continue to be at all times covered by a blanket
fidelity bond or similar coverage in an amount not less than the minimal
coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The
aforesaid bond includes coverage for larceny and embezzlement and is
issued by a reputable bonding company.
2.8. The parties to this Agreement represent and warrant that they shall
comply with all the applicable laws and regulations designed to prevent
money laundering including without limitation the International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001 (Title III
of the USA PATRIOT ACT), and if required by such laws or regulations
will share information with each other about individuals, entities,
organizations and countries suspected of possible terrorist or money
laundering activities in accordance with Section 314(b) of the USA
PATRIOT ACT. Company represents and warrants that its AML Program
includes written policies and procedures regarding the (i) verification
of the identity of its customers and potential customers who seek to
purchase a Contract and the source of such customers' funds to be
applied to the Contract, and (ii) reporting of any suspicious
transactions in a customer's Contract with the Company. Company agrees
to cooperate with the Fund to satisfy the Fund's AML due diligence
policies, which may include annual AML compliance certifications,
periodic AML due
6
diligence reviews and/or other requests deemed necessary to ensure its
compliance with the AML regulations. Company will (but only to the
extent consistent with applicable law) take all steps necessary and
appropriate to provide the Fund with any requested information about any
Contract owner and his or her investment in the Fund through the
Contract in the event that the Fund requests such information due to an
inquiry or investigation by any law enforcement, regulatory, or
administrative authority.
2.9. The Company acknowledges the Fund has adopted policies and procedures
reasonably designed to prevent frequent or excessive purchases,
exchanges and redemptions of the shares of Portfolios in quantities
great enough to disrupt orderly management of the corresponding
investment portfolio. These policies are disclosed in the Fund's current
prospectus.
The Fund acknowledges that the Company, on behalf of its Accounts, has
adopted policies and procedures reasonably designed to detect and deter
frequent transfers of Contract value among the subaccounts of the
Accounts including those investing in Portfolios available as investment
options under the Contracts. These policies are described in the current
prospectuses of the Accounts through which the Contracts are offered.
The Company will cooperate with the Fund's reasonable requests in taking
steps to deter and detect such transfers by any Contract owner. Subject
to applicable law and the terms of each Contract, the Company will
provide promptly upon request by the Fund, directly or through its
designee, the following information:
o the Taxpayer Identification Number of all Contract owners
that purchased, redeemed, transferred, or exchanged shares
of a Fund held under a Contract; and,
o the amount and dates of such Contract owners purchases,
redemptions, transfers and exchanges in subaccounts
available under the Contract which invest in shares of any
Fund.
Requests must set forth a specific period, not to exceed ninety (90)
days from the date of the request, for which transaction information is
sought. The Fund may request transaction information older than ninety
(90) days from the date of the request as it deems necessary to
investigate compliance with policies established by the Fund for the
purpose of eliminating or reducing any dilution of the value of the
outstanding shares issued by the Fund.
Company agrees to transmit the requested information that is on its
books and records to the Fund or its designee promptly, but in any event
not later than ten (10) Business Days, after receipt of a request. If
the requested information is not on the Company's books and records,
Company agrees to use reasonable efforts to: (i) promptly obtain and
transmit the requested information; (ii) obtain assurances from the
Contract owner that the requested information will be provided directly
to the Fund promptly; or (iii) if directed
7
by the Fund, block further purchases of Fund shares from such Contract
owner. In such instance, Company agrees to inform the Fund whether it
plans to perform (i), (ii) or (iii). Responses required by this
paragraph must be communicated in writing and in a format mutually
agreed upon by the parties. To the extent practicable, the format for
any transaction information provided to the Fund should be consistent
with the NSCC Standardized Data Reporting Format.
The Fund agrees that all information received from the Company under
this Section 2.9 is subject to the confidentiality standards set forth
in Section 9.2 of this Agreement.
Company agrees to execute written instructions from the Fund to restrict
or prohibit further purchases or exchanges of subaccounts available
under the Contract which invest in shares of the Fund by a Contract
owner that has been identified by the Fund as having engaged in
transactions in the Fund's shares (directly or indirectly through the
Company's Account) that violate policies established by the Fund for the
purpose of eliminating or reducing any dilution of the value of the
outstanding shares issued by the Fund.
Instructions must include the TIN and the specific restriction(s) to be
executed. If the TIN is not known, the Fund or its designee will contact
the Company and the Company will again provide the Fund with the TIN.
Company agrees to execute instructions as soon as reasonably
practicable, but not later than seven (7) Business Days after receipt of
the instructions by the Company.
Company must provide written confirmation to the Fund that instructions
have been executed. Company agrees to provide confirmation as soon as
reasonably practicable, but not later than ten (10) Business Days after
the instructions have been executed.
When the Fund or its designee has given the Company a written
instruction pursuant to this Section 2.9 to restrict or prohibit further
purchases by a Contract owner of the Fund's shares, the Fund or its
designee may request and the Company will provide the Fund or its
designee with the name or other identifier of any investment
professional who is listed on the Company's records as the agent of
record for the restricted Contract if the investment professional is
employed by a broker dealer affiliate of the Company. If the restricted
Contract was sold by a broker dealer firm unaffiliated with the Company,
the Company will provide the Fund or its designee with the name of the
selling broker dealer firm.
The parties shall negotiate in good faith such additional terms and
conditions regarding implementation of the foregoing obligations of the
parties under Rule 22c-2 as any party may wish to address.
ARTICLE III. OBLIGATIONS OF THE PARTIES
--------------------------
3.1. The Fund will prepare and be responsible for filing with the SEC and any
state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials
8
such as voting instruction solicitation materials), prospectuses and
statements of additional information of the Fund. The Fund will bear the
costs of registration and qualification of its shares, preparation and
filing of documents listed in this Section 3.1 and all taxes to which an
issuer is subject on the issuance and transfer of its shares. In the
event that the Fund initiates (i) a reorganization as defined by Section
2 of the 1940 Act of the Fund or a Portfolio, or (ii) a change in the
name of the Fund or a Portfolio, the Fund or its designee shall
reimburse the Company for the Company's reasonable internal and
out-of-pocket costs associated with the aforementioned actions. The
Company agrees to use its best efforts to minimize any costs incurred
under this Section and shall provide the Fund or its designee with
acceptable documentation of any such costs incurred.
3.2. At the option of the Company, the Fund will either: (a) provide the
Company with as many copies of the Fund's current prospectus, statement
of additional information, annual report, semi-annual report and other
shareholder communications, including any amendments or supplements to
any of the foregoing, as the Company will reasonably request; or (b)
provide the Company with a camera-ready copy, computer disk or other
medium agreed to by the parties of such documents in a form suitable for
printing. The Fund will bear one-half of the cost of typesetting and
printing such documents and of distributing such documents to existing
Contract owners, with the Company bearing the remainder of the cost. To
the extent that such documents for the Fund are printed in combination
with such documents for other funds, the Fund will bear its pro-rata
share of the cost of typesetting, printing and distributing such
combined document. The Company will bear the cost of distributing all
such documents to prospective Contract owners and applicants as
required. The fund will provide written instruction to all Participating
Insurance Companies including Company each time the Fund amends its
current Prospectus, directing the Participating Insurance Companies as
to whether the amendment or supplement is to be provided (a) immediately
to Contract owners who have Contract value allocated to a Portfolio or
(b) is to be held and combined with another Fund or Contract related
mailing as permitted by applicable federal securities laws. The Fund
agrees that the instruction it gives Company in each instance will be
identical to the instruction it provides other Participating Insurance
Companies.
3.3. The Fund, at its expense, either will:
(a) distribute its proxy materials directly to the appropriate
Contract owners; or
(b) provide the Company or its mailing agent with copies of its proxy
materials in such quantity as the Company will reasonably require
and the Company will distribute the materials to existing Contract
owners and will xxxx the Fund for the reasonable cost of such
distribution. The Fund will bear the cost of tabulation of proxy
votes.
3.4. If and to the extent required by law the Company will:
(a) provide for the solicitation of voting instructions from Contract
owners;
9
(b) vote the shares of the Portfolios held in the Account in
accordance with instructions received from Contract owners; and
(c) vote shares of the Portfolios held in the Account for which no
timely instructions have been received, in the same proportion as
shares of such Portfolio for which instructions have been received
from the Company's Contract owners;
so long as and to the extent that the SEC continues to interpret the
1940 Act to require pass-through voting privileges for variable contract
owners. The Company reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the extent permitted by
law.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular, the Fund either will provide
for annual meetings (except insofar as the SEC may interpret Section 16
of the 1940 Act not to require such meetings) or, as the Fund currently
intends, to comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well
as with Sections 16(a) and, if and when applicable, 16(b). Further, the
Fund will act in accordance with the SEC's interpretation of the
requirements of Section 16(a) with respect to periodic elections of
directors and with whatever rules the SEC may promulgate with respect
thereto.
3.6. The Company will prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports,
notices, prospectuses and statements of additional information of the
Contracts. The Company will bear the cost of registration and
qualification of the Contracts and preparation and filing of documents
listed in this Section 3.6. The Company also will bear the cost of
typesetting, printing and distributing the documents listed in this
Section 3.6 to existing and prospective Contract owners.
3.7. The Company will furnish, or will cause to be furnished, to the Fund or
the Adviser, each piece of sales literature or other promotional
material in which the Fund or the Adviser is named, at least ten (10)
Business Days prior to its use. No such material will be used if the
Fund or the Adviser reasonably objects to such use within five (5)
Business Days after receipt of such material.
3.8. The Company will not give any information or make any representations or
statements on behalf of the Fund or concerning the Fund in connection
with the sale of the Contracts other than the information or
representations contained in the registration statement, prospectus or
statement of additional information for Fund shares, as such
registration statement, prospectus and statement of additional
information may be amended or supplemented from time to time, or in
reports or proxy statements for the Fund, or in published reports for
the Fund which are in the public domain or approved by the Fund or the
Adviser for distribution, or in sales literature or other material
provided by the Fund or by the Adviser, except with permission of the
Fund or the Adviser. The Fund and the Adviser agree to respond to any
request for approval on a prompt and timely basis.
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Nothing in this Section 3.8 will be construed as preventing the Company
or its employees or agents from giving advice on investment in the Fund.
3.9. The Fund or the Adviser will furnish, or will cause to be furnished, to
the Company or its designee, each piece of sales literature or other
promotional material in which the Company or an Account is named, at
least ten (10) Business Days prior to its use. No such material will be
used if the Company reasonably objects to such use within five (5)
Business Days after receipt of such material.
3.10. The Fund and the Adviser will not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, each Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus or
statement of additional information for the Contracts, as such
registration statement, prospectus and statement of additional
information may be amended or supplemented from time to time, or in
published reports for each Account or the Contracts which are in the
public domain or approved by the Company for distribution to Contract
owners, or in sales literature or other material provided by the
Company, except with permission of the Company. The Company agrees to
respond to any request for approval on a prompt and timely basis.
3.11. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate
to the Fund or its shares, contemporaneously with the filing of such
document with the SEC or the NASD.
3.12. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional
information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no action letters, and all amendments to any of the above,
that relate to the Contracts or each Account, contemporaneously with the
filing of such document with the SEC or the NASD.
3.13. For purposes of this Article III, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper,
magazine, or other periodical), radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or
other public media, (e.g., on-line networks such as the Internet or
other electronic messages), sales literature (i.e., any written
communication distributed or made generally available to customers or
the public, including brochures, circulars, research reports, market
letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports,
and proxy materials and any other material constituting sales literature
or advertising under the NASD rules, the 1933 Act or the 1940 Act.
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3.14. The Fund and the Adviser hereby consent to the Company's use of the name
Third Avenue Funds in connection with marketing the Contracts, subject
to the terms of Sections 3.7 and 3.8 of this Agreement. Such consent
will terminate with the termination of this Agreement.
3.15. The Adviser will be responsible for calculating the performance
information for the Fund. The Company will be responsible for
calculating the performance information for the Contracts. The Fund and
the Adviser agree to provide the Company with performance information
for the Fund on a timely basis to enable the Company to calculate
performance information for the Contracts in accordance with applicable
state and federal law.
ARTICLE IV. POTENTIAL CONFLICTS
-------------------
4.1. Subject to Section 4.2 of this Agreement, the Fund Board will monitor
the Fund for the existence of any irreconcilable material conflict among
the interests of the contract owners of all separate accounts investing
in the Fund, An irreconcilable material conflict may arise for a variety
of reasons, including: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax,
or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Portfolio are being managed; (e)
a difference in voting instructions given by Participating Insurance
Companies or by variable annuity and variable life insurance contract
owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Fund Board will promptly inform the
Company if it determines that an irreconcilable material conflict exists
and the implications thereof. A majority of the Fund Board will consist
of persons who are not "interested" persons of the Fund.
4.2. The Company will report any potential or existing conflicts of which it
is aware to the Fund Board. The Company agrees to assist the Fund Board
in carrying out its responsibilities, as delineated in the Exemptive
Order, by providing the Fund Board with all information reasonably
necessary for the Fund Board to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to inform
the Fund Board whenever Contract owner voting instructions are to be
disregarded. The Fund Board will record in its minutes, or other
appropriate records, all reports received by it and all action with
regard to a conflict.
4.3. If it is determined by a majority of the Fund Board, or a majority of
its disinterested directors, that an irreconcilable material conflict
exists, the Company and other Participating Insurance Companies will, at
their expense and to the extent reasonably practicable (as determined by
a majority of the disinterested directors), take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict,
up to and including: (a) withdrawing the assets allocable to some or all
of the Accounts from the Fund or any Portfolio and reinvesting such
assets in a different investment medium,
12
including (but not limited to) another portfolio of the Fund, or
submitting the question whether such segregation should be implemented
to a vote of all affected contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., variable annuity
contract owners or variable life insurance contract owners of one or
more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected contract owners the option of
making such a change; and (b) establishing a new registered management
investment company or managed separate account.
4.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions, and such
disregard of voting instructions could conflict with the majority of
contract owner voting instructions, and the Company's judgment
represents a minority position or would preclude a majority vote, the
Company maybe required, at the Fund's election, to withdraw the affected
subaccount of the Account's investment in the Fund and terminate this
Agreement with respect to such subaccount; provided, however, that such
withdrawal and termination will be limited to the extent required by the
foregoing irreconcilable material conflict as determined by a majority
of the disinterested directors of the Fund Board. No charge or penalty
will be imposed as a result of such withdrawal. Any such withdrawal and
termination must take place within six (6) months after the Fund gives
written notice to the Company that this provision is being implemented.
Until the end of such six-month period the Adviser and Fund will, to the
extent permitted by law and any exemptive relief previously granted to
the Fund, continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
4.5. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with
the majority of other state insurance regulators, then the Company will
withdraw the affected subaccount of the Accounts investment in the Fund
and terminate this Agreement with respect to such subaccount; provided,
however, that such withdrawal and termination will be limited to the
extent required by the foregoing irreconcilable material conflict as
determined by a majority of the disinterested directors of the Fund
Board. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal and termination must take place within
six (6) months after the Fund gives written notice to the Company that
this provision is being implemented. Until the end of such six-month
period the Adviser and Fund will, to the extent permitted by law and any
exemptive relief previously granted to the Fund, continue to accept and
implement orders by the Company for the purchase (and redemption) of
shares of the Fund.
4.6. For purposes of Sections 4.3 through 4.6 of this Agreement, a majority
of the disinterested members of the Fund Board will determine whether
any proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund be required to establish a new
funding medium for the Contracts. The Company will not be required by
this Article IV to establish a new funding medium for the Contracts if
an offer to do so has been declined by vote of a majority of Contract
owners affected by the irreconcilable material conflict.
13
4.7. The Company will at least annually submit to the Fund Board such
reports, materials or data as the Fund Board may reasonably request so
that the Fund Board may fully carry out the duties imposed upon it as
delineated in the Exemptive Order, and said reports, materials and data
will be submitted more frequently if deemed appropriate by the Fund
Board.
4.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of
the 1940 Act or the rules promulgated thereunder with respect to mixed
or shared funding (as defined in the Exemptive Order) on terms and
conditions materially different from those contained in the Exemptive
Order, then: (a) the Fund and/or the Participating Insurance Companies,
as appropriate, will take such steps as may be necessary to comply with
Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.4, 3.5, 4.1, 4.2,
4.3, 4.4, and 4.5 of this Agreement will continue in effect only to the
extent that terms and conditions substantially identical to such
Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE V. INDEMNIFICATION
---------------
5.1. Indemnification By The Company
------------------------------
(a) The Company agrees to indemnify and hold harmless the Fund, the
Adviser, and each person, if any, who controls or is associated
with the Fund or the Adviser within the meaning of such terms
under the federal securities laws (but not any Participating
Insurance Companies) and any director, trustee, officer, partner,
employee or agent of the foregoing (collectively, the "Indemnified
Parties" for purposes of this Section 5.1) against any and all
losses, claims, expenses, damages, liabilities (including amounts
paid in settlement with the written consent of the Company) or
litigation (including reasonable legal and other expenses), to
which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements:
(1) arise out of or are based on any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus or statement of
additional information for the Contracts or contained in the
Contracts or sales literature or other promotional material
for the Contracts (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material
fact required to be stated or necessary to make such
statements not misleading in light of the circumstances in
which they were made; provided that this agreement to
indemnify will not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Adviser or
the Fund for use in the registration statement, prospectus
or
14
statement of additional information for the Contracts or in
the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale
of the Contracts or Fund shares; or
(2) arise out of or are based on any untrue statement or alleged
untrue statement of a material fact contained in the Fund
registration statement, prospectus, statement of additional
information or sales literature or other promotional
material of the Fund (or any amendment or supplement to any
of the foregoing), or the omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances in which they were made, if such statement or
omission was made in reliance upon and in conformity with
information furnished to the Fund or Adviser in writing by
or on behalf of the Company or persons under its control; or
(3) arise out of or are based on any wrongful conduct of, or
violation of applicable federal or state law by, the Company
or persons under its control or subject to its
authorization, with respect to the purchase of Fund shares
or the sale, marketing or distribution of the Contracts; or
(4) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of
this Agreement including, but not limited to, a material
mistake in calculating the performance information for the
Contracts which causes losses to the Adviser or material
mistakes it makes in reproducing performance information for
the Fund in accordance with Section 3.15 of this Agreement;
or
(5) arise out of any material breach of any representation
and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of
this Agreement by the Company or persons under its control
or subject to its authorization; except to the extent
provided in Sections 5.1(b) and 5.4 hereof. This
indemnification will be in addition to any liability that
the Company otherwise may have.
(b) No party will be entitled to indemnification under Section 5.1(a)
if such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, or gross negligence in the
performance of such party's duties under this Agreement, or by
reason of such party's reckless disregard of its obligations or
duties under this Agreement by the party seeking indemnification.
(c) The Indemnified Parties promptly will notify the Company of the
commencement of any litigation, proceedings, complaints or actions
by regulatory authorities against them in connection with the
issuance or sale of the Fund shares or the Contracts or the
operation of the Fund.
15
5.2. Indemnification By The Adviser
------------------------------
(a) The Adviser agrees to indemnify and hold harmless the Company and
each person, if any, who controls or is associated with the
Company within the meaning of such terms under the federal
securities laws and any director, trustee, officer, partner,
employee or agent of the foregoing (collectively, the "Indemnified
Parties" for purposes of this Section 5.2) against any and all
losses, claims, expenses, damages, liabilities (including amounts
paid in settlement with the written consent of the Adviser) or
litigation (including reasonable legal and other expenses), to
which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements:
(1) arise out of or arc based on any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus or statement of
additional information for the Fund or sales literature or
other promotional material produced by the Fund (or any
amendment or supplement to any of the foregoing), or arise
out of or are based on the omission or alleged omission to
state therein a material fact required to be stated or
necessary to make such statements not misleading in light of
the circumstances in which they were made; provided that
this agreement to indemnify will not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and
in conformity with information furnished to the Adviser or
Fund by or on behalf of the Company for use in the
registration statement, prospectus or statement of
additional information for the Fund or in sales literature
of the Fund (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund
shares; or
(2) arise out of or are based on any untrue statement or alleged
untrue statement of a material fact contained in the
Contract registration statement, prospectus or statement of
additional information or sales literature or other
promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or the omission or
alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in
which they were made, if such statement or omission was made
in reliance upon and in conformity with information
furnished to the Company in writing by or on behalf of the
Adviser or persons under its control; or
(3) arise out of or are based on any wrongful conduct of, or
violation of applicable federal and state law by, the
Adviser or the Fund or persons under their respective
control or subject to their authorization with respect to
the sale of Fund shares; or
16
(4) arise as a result of any failure by the Fund, the Adviser or
persons under their respective control or subject to their
authorization to provide the services and furnish the
materials under the terms of this Agreement including, but
not limited to, a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification
requirements and procedures related thereto specified in
Section 2.5 of this Agreement; a material mistake in
calculating the performance information for the Fund which
causes losses to the Company or material mistakes it makes
in reproducing performance information for the Contracts in
accordance with Section 3.15 or this Agreement; or any
material errors in or untimely calculation or reporting of
the daily net asset value per share or dividend or capital
gain distribution rate (referred to in this Section
5.2(a)(4) as an "error"); provided, that the foregoing will
not apply where such error is the result of incorrect
information supplied by or on behalf of the Company to the
Fund or the Adviser, and will be limited to (i) reasonable
administrative costs necessary to correct such error, and
(ii) amounts which the Company has paid out of its own
resources to make Contract owners whole as a result of such
error; or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser or the
Fund in this Agreement, or arise out of or result from any
other material breach of this Agreement by the Adviser or
the Fund or persons under their respective control or
subject to their authorization;
except to the extent provided in Sections 5.2(b) and 5.4 hereof.
This indemnification will be in addition to any liability that the
Company otherwise may have.
(b) No party will be entitled to indemnification under Section 5.2(a)
if such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, or gross negligence in the
performance of such party's duties under this Agreement, or by
reason of such party's reckless disregard of its obligations or
duties under this Agreement by the party seeking indemnification.
(c) The Indemnified Parties will promptly notify the Adviser and the
Fund of the commencement of any litigation, proceedings,
complaints or actions by regulatory authorities against them in
connection with the issuance or sale of the Contracts or the
operation of the Account.
17
5.3. Indemnification by the Fund
---------------------------
(a) To the extent, and only to the extent of proceeds of any
applicable insurance coverage of the Fund, the Fund agrees to
indemnify and hold harmless the Company and each person, if any,
who controls or is associated with the Company within the meaning
of such terms under the federal securities laws and any director,
trustee, officer, partner, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes of this
Section 5.3) against any and all losses, claims, expenses,
damages, liabilities (including amounts paid in settlement with
the written consent of the Adviser) or litigation (including
reasonable legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or
settlements are related to the operations of the Fund and:
(1) arise out of or are based on any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus or statement of
additional information for the Fund or sales literature or
other promotional material produced by the Fund (or any
amendment or supplement to any of the foregoing), or arise
out of or are based on the omission or alleged omission to
state therein a material fact required to be stated or
necessary to make such statements not misleading in light of
the circumstances in which they were made; provided that
this agreement to indemnify will not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and
in conformity with information furnished to the Fund by or
on behalf of the Company for use in the registration
statement, prospectus or statement of additional information
for the Fund or in sales literature of the Fund (or any
amendment or supplement) or otherwise for use in connection
with the sale of Fund shares; or
(2) arise out of or are based on any untrue statement or alleged
untrue statement of a material fact contained in the
Contract registration statement, prospectus or statement of
additional information or sales literature or other
promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or the omission or
alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in
which they were made, if such statement or omission was made
in reliance upon and in conformity with information
furnished to the Company in writing by or on behalf of the
Fund or persons under its control; or
(3) arise out of or are based on any wrongful conduct of the
Fund or its Fund Board or officers with respect to the sale
of Fund shares; or
18
(4) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement including, but not limited to, a failure, whether
unintentional or in good faith or otherwise, to comply with
the diversification requirements and procedures related
thereto specified in Section 2.5 of this Agreement; a
material mistake in calculating the performance information
for the Fund which causes losses to the Company or material
mistakes it makes in reproducing performance information for
the Contracts in accordance with Section 3.15 or this
Agreement; or any material errors in or untimely calculation
or reporting of the daily net asset value per share or
dividend or capital gain distribution rate (referred to in
this Section 5.3(a)(4) as an "error"); provided, that the
foregoing will not apply where such error is the result of
incorrect information supplied by or on behalf of the
Company to the Fund or the Adviser, and will be limited to
(i) reasonable administrative costs necessary to correct
such error, and (ii) amounts which the Company has paid out
of its own resources to make Contract owners whole as a
result of such error; or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement, or arise out of or result from any other material
breach of this Agreement by the Fund or persons under its
control or subject to its authorization;
except to the extent provided in Sections 5.3(b) and 5.4 hereof.
(b) No party will be entitled to indemnification under Section 5.3(a)
if such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, or gross negligence in the
performance of such party's duties under this Agreement, or by
reason of such party's reckless disregard of its obligations or
duties under this Agreement by the party seeking indemnification.
(c) The indemnified Parties will promptly notify the Fund of the
commencement of any litigation, proceedings, complaints or actions
by regulatory authorities against them in connection with the
issuance or sale of the Contracts or the operation of the Account.
5.4. Indemnification Procedure
-------------------------
Any person obligated to provide indemnification under this Article V
("Indemnifying Party" for the purpose of this Section 5.4) will not be
liable under the indemnification provisions of this Article V with
respect to any claim made against a party entitled to indemnification
under this Article V ("Indemnified Party" for the purpose of this
Section 5.4) unless such Indemnified Party will have notified the
Indemnifying Party in writing within a reasonable time after the summons
or other first legal process giving information of the nature of the
claim will have been served upon such Indemnified Party (or after such
party will have received notice of such service on any designated
agent), but failure
19
to notify the Indemnifying Party of any such claim will not relieve the
Indemnifying Party from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on
account of the indemnification provision of this Article V, except to
the extent that the failure to notify results in the failure of actual
notice to the Indemnifying Party and such Indemnifying Party is damaged
as a result of failure to give such notice. In case any such action is
brought against the Indemnified Party, the Indemnifying Party will be
entitled to participate, at its own expense, in the defense thereof. The
Indemnifying Party also will be entitled to assume the defense thereof,
with counsel reasonably satisfactory to the party named in the action.
After notice from the Indemnifying Party to the Indemnified Party of the
Indemnifying Party's election to assume the defense thereof, the
Indemnified Party will bear the fees and expenses of any additional
counsel retained by it, and the Indemnifying Party will not be liable to
such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the
defense thereof other than reasonable costs of investigation, unless:
(a) the Indemnifying Party and the Indemnified Party will have mutually
agreed to the retention of such counsel; or (b) the named parties to any
such proceeding (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The Indemnifying Party will
not be liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there is a final
judgment for the plaintiff, the Indemnifying Party agrees to indemnify
the Indemnified Party from and against any loss or liability by reason
of such settlement or judgment. A successor by law of the parties to
this Agreement will be entitled to the benefits of the indemnification
contained in this Article V. The indemnification provisions contained in
this Article V will survive any termination of this Agreement.
5.5. Limitation of Liability
-----------------------
Except as expressly stated herein, as between the parties, in no event
will any party to this Agreement be responsible to any other party for
any incidental, indirect, consequential, punitive or exemplary damages
of any kind arising from this Agreement, including without limitation,
lost revenues, loss of profits or loss of business.
5.6. Arbitration
-----------
Any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, will be settled by arbitration administered by
the American Arbitration Association in accordance with its Commercial
Arbitration Rules and Title 9 of the U.S. Code. Judgment on the award
rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The number of arbitrators will be three, one of
whom will be appointed by the Company or an affiliate; one of whom will
be appointed by the Fund and/or the Adviser or an affiliate; and the
third of whom will be selected by mutual agreement, if possible, within
30 days of the selection of the second arbitrator and thereafter by the
administering authority. The place of arbitration will be Minneapolis,
Minnesota or New York, New York. The arbitrators will have no authority
to award
20
punitive damages or any other damages not measured by the prevailing
party's actual damages, and may not, in any event, make any ruling,
finding or award that does not conform to the terms and conditions of
this Agreement. Any party may make an application to the arbitrators
seeking injunctive relief to maintain the status quo until such time as
the arbitration award is rendered or the controversy is otherwise
resolved. Any party may apply to any court having jurisdiction hereof
and seek injunctive relief in order to maintain the status quo until
such time as the arbitration award is rendered or the controversy is
otherwise resolved.
ARTICLE VI. APPLICABLE LAW
--------------
6.1. This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Minnesota.
6.2. This Agreement will be subject to the provisions of the 1933 Act, the
Securities Exchange Act of 1934 and the 1940 Act, and the rules and
regulations and rulings thereunder, including such exemptions from those
statutes, rules and regulations as the SEC may grant (including, but not
limited to, the Exemptive Order) and the terms hereof will be
interpreted and construed in accordance therewith.
ARTICLE VII. TERMINATION
-----------
7.1. This Agreement will terminate:
(a) at the option of any party, with or without cause, with respect to
some or all of the Portfolios, upon sixty (60) days' advance
written notice to the other parties or, if later, upon receipt of
any required exemptive relief or orders from the SEC, unless
otherwise agreed in a separate written agreement among the
parties; (b) at the option of the Company, upon receipt of the
Company's written notice by the other parties, with respect to any
Portfolio if shares of the Portfolio are not reasonably available
to meet the requirements of the Contracts as determined in good
faith by the Company, or
(b) at the option of the Company, upon receipt of the Company's
written notice by the other parties, with respect to any Portfolio
in the event any of the Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or federal
law or such law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
Company; or
(c) at the option of the Fund, upon receipt of the Fund's written
notice by the other parties, upon institution of formal
proceedings against the Company by the NASD, the SEC, the
insurance commission of any state or any other regulatory body
regarding the Company's duties under this Agreement or related to
the sale of the Contracts, the administration of the Contracts,
the operation of the Account, or the purchase of the Fund shares,
provided that the Fund determines in its sole judgment, exercised
in good faith, that any such proceeding would have a material
21
adverse effect on the Company's ability to perform its obligations
under this Agreement; or
(d) at the option of the Company, upon receipt of the Company's
written notice by the other parties, upon institution of formal
proceedings against the Fund or the Adviser by the NASD, the SEC,
or any state securities or insurance department or any other
regulatory body, regarding the Fund's or the Adviser's duties
under this Agreement or related to the sale of Fund shares or the
administration of the Fund, provided that the Company determines
in its sole judgment, exercised in good faith, that any such
proceeding would have a material adverse effect on the Fund's or
the Adviser's ability to perform its obligations under this
Agreement; or
(e) at the option of the Company, upon receipt of the Company's
written notice by the other parties, if the Fund ceases to qualify
as a Regulated Investment Company under Subchapter M of the
Internal Revenue Code, or under any successor or similar
provision, or if the Company reasonably and in good faith believes
that the Fund may fail to so qualify; or
(f) at the option of the Company, upon receipt of the Company's
written notice by the other parties, with respect to any Portfolio
if the Fund fails to meet the diversification requirements
specified in Article VII hereof or if the Company reasonably and
in good faith believes the Fund may fail to meet such
requirements; or
(g) at the option of any party to this Agreement, upon written notice
to the other parties, upon another party's material breach of any
provision of this Agreement; or
(h) at the option of the Company or the Fund upon a determination by a
majority of the Fund Board, or a majority of the disinterested
Fund Board members, that an irreconcilable material conflict
exists among the interests of: (i) all contract owners of variable
insurance products of all separate accounts; or (ii) the interests
of the Participating Insurance Companies investing in the Fund as
set forth in Article IV of this Agreement; or
(i) at the option of the Fund in the event any of the Contracts are
not issued or sold in accordance with applicable federal and/or
state law. Termination will be effective immediately upon such
occurrence without notice.
7.2. Notwithstanding any termination of this Agreement, the Fund and the
Adviser will, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of
this Agreement, for all Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the
Existing Contracts will be permitted to reallocate investments in the
Portfolios (as in effect on such date), redeem investments in the
Portfolios and/or invest in the Portfolios upon the making of additional
purchase
22
payments under the Existing Contracts. The parties agree that this
Section 7.2 will not apply to any terminations under Article IV and the
effect of such Article IV terminations will be governed by Article IV of
this Agreement.
7.3. The provisions of Article V will survive the termination of this
Agreement and as long as shares of the Fund are held under Existing
Contracts in accordance with Section 7.2, the provisions of this
Agreement will survive the termination of this Agreement with respect to
those Existing Contracts.
ARTICLE VIII. NOTICES
-------
Any notice will be deemed duly given when sent by registered or certified mail
(or other method agreed to by the parties) to each other party at the address
of such party set forth below or at such other address as such party may from
time to time specify in writing to the other parties.
If to the Company:
IDS Life Insurance Company of New York
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
ATTN: Vice President
With a copy to:
Riversource Distributors, Inc.
00000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
ATTN: Vice President and Group Counsel
If to the Fund:
Third Avenue Variable Series Trust
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
ATTN: General Counsel
If to the Adviser:
Third Avenue Management LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
ATTN: General Counsel
ARTICLE IX. MISCELLANEOUS
-------------
9.1. All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither
the directors, trustees, officers,
23
partners, employees, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
9.2. Use and Disclosure of Confidential Information
----------------------------------------------
Notwithstanding anything to the contrary contained in this Agreement,
and in addition to and not in lieu of other provisions in this
Agreement:
(a) Confidential Information includes without limitation all
information of the Company or its subsidiaries, affiliates, or
licensees; or the accounts, account numbers, names, addresses,
social security numbers or any other personal identifier of such
customers; or any information derived therefrom.
(b) Neither the Fund nor the Adviser may use or disclose Confidential
Information for any purpose other than to carry out the purpose
for which Confidential Information was provided to the Fund and/or
the Adviser as set forth in the Agreement, and agree to cause all
employees, agents and representatives of the Fund and the Adviser,
or any other party to whom the Fund and/or the Adviser may provide
access to or disclose Confidential Information to limit the use
and disclosure of Confidential Information to that purpose.
(c) The Fund and the Adviser agree to implement appropriate measures
designed to ensure the security and confidentiality of
Confidential Information, to protect such information against any
anticipated threats or hazards to the security or integrity of
such information, and to protect against unauthorized access to,
or use of, Confidential Information that could result in
substantial harm or inconvenience to any of the customers of the
Company or any of its subsidiaries, affiliates, or licensees; the
Fund and the Adviser further agree to cause all agents,
representatives or subcontractors of the Fund and the Adviser, or
any other party to whom the Fund and/or the Adviser may provide
access to or disclose Confidential Information to implement
appropriate measures designed to meet the objectives set forth in
this paragraph.
9.3. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect,
9.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the
same instrument.
9.5. If any provision of this Agreement will be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement will not be affected thereby.
9.6. This Agreement will not be assigned by any party hereto without the
prior written consent of all the parties. The parties agree that the
contemplated sale of an interest in the Adviser to Affiliated Management
Group shall not constitute as assignment of this Agreement.
24
9.7. Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including without limitation
the SEC, the NASD and state insurance regulators) and will permit each
other and such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement
or the transactions contemplated hereby.
9.8. Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or board action, as
applicable, by such party and when so executed and delivered this
Agreement will be the valid and binding obligation of such party
enforceable in accordance with its terms.
9.9. The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts,
the Accounts or the Portfolios of the Fund or other applicable terms of
this Agreement
25
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and behalf by its duly authorized representative as of
the date specified above.
THIRD AVENUE VARIABLE SERIES THIRD AVENUE MANAGEMENT LLC
TRUST
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxx
------------------------------ -----------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
Title: CFO Title: CFO
IDS LIFE INSURANCE COMPANY OF
NEW YORK ATTEST:
By: /s/ Xxxxxxx X. Xxxxx III By: /s/ Xxxxx Xxxxxx
------------------------------ -----------------------
Name: Xxxxxxx X. Xxxxx III Name: Xxxxx Xxxxxx
Title: Vice President Title: Assistant Secretary
26
Schedule 1
PARTICIPATION AGREEMENT
By and Among
THIRD AVENUE VARIABLE SERIES TRUST
And
THIRD AVENUE MANAGEMENT LLC
And
IDS LIFE INSURANCE COMPANY OF NEW YORK
The following Accounts of IDS Life Insurance Company of New York are permitted
in accordance with the provisions of this Agreement to invest in Portfolios of
the Fund shown in Schedule 2:
IDS LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
(Effective January 2, 2007: RiverSource of New York Variable Annuity
Account)
IDS LIFE OF NEW YORK ACCOUNT 8
(Effective January 2, 2007: RiverSource of New York Account 8)
27
Schedule 2
PARTICIPATION AGREEMENT
By and Among
THIRD AVENUE VARIABLE SERIES TRUST
And
THIRD AVENUE MANAGEMENT LLC
And
IDS LIFE INSURANCE COMPANY OF NEW YORK
The Accounts shown on Schedule 1 may invest in the following Portfolios:
Third Avenue Value Portfolio
28
